Five CPEC projects face the axe

Published: July 20, 2016
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Govt directs sponsors to meet December 2018 deadline. PHOTO: AFP

Govt directs sponsors to meet December 2018 deadline. PHOTO: AFP

ISLAMABAD: Five energy projects of the China-Pakistan Economic Corridor (CPEC), worth around $7 billion, are at risk of being axed owing to slow pace of their development.

The water and power ministry has directed sponsors of these projects to complete them by the December 2018 deadline or face ejection from the multibillion-dollar project, say documents and officials of ministries of planning and development and water and power.

Pakistan waives off bidding condition for CPEC projects

One project relates to mining coal in Thar while the remaining are power plants which are listed to generate 4,620 megawatts of power. Four of these projects fall under the ‘priority’ schemes category and have to be completed by December 2018 as per the understanding with Chinese authorities.

If the government finally decides to drop these schemes from CPEC, Sindh’s share in the mega project will fall from $11.3 billion to roughly $6.7 billion. Balochistan’s share in CPEC projects will fall to around $7 billion.

Among the projects facing the axe are four Sindh-based schemes, including the Engro surface mine in Block–II of Thar Coal with a capacity of 3.8 million metric tonnes per annum, the 1,320MW Engro Thar coal-fired power plant, the 1,320MW Sino-Sindh Resource Limited Power Plant in Thar Coal Block-I, and the 1,320MW Thar Mine Mouth Oracle coal-fired power plant.

The Balochistan-based project includes the 660MW HUBCO coal-fired coastal power plant.

Govt’s tight pockets could hamper CPEC projects

The warnings is a means for the government to pressure sponsors into adhering to the agreed timelines for these schemes, explained Ahsan Iqbal, the minister for planning and development, while talking to The Express Tribune.

Iqbal, however, stated that these projects are at various stages of implementation adding that he hopes that Engro’s 1,320MW project will be completed by December 2018 while the HUBCO project will be commissioned by 2019.

The commissioning date of 3.8mt mining at Thar Block-II project is set for June 2019 but the water and power ministry has asked Sindh Engro Coal Mining Company to bring it forward to December 2018 or “it will be at risk of deletion from the CPEC”. Similarly, the 1,320MW Engro Thar power plant is expected to be commissioned by June 2019 but the water and power ministry wants it to become operational by December 2018.

The water and power ministry has asked sponsors of the 1,320MW Sino-Sindh Power Plant, which has run into operational issues, to start construction of the project or face demotion from the list of priority schemes to the list of actively promoted CPEC projects or even deletion from the corridor altogether.

China irked by delay in Gwadar project

The Hubco project, which was earlier promoted to a priority status, is again at risk of demotion to the second phase of the CPEC, which are set for completion by 2022. The project’s sponsors are currently negotiating with financial institutions on loan term sheets but the ministry has asked them to start construction work from equity to meet the December 2018 commissioning date.

Sponsors of the 1,320MW Oracle power plants, which is on the list of actively promoted projects, has yet to sort out issues with equity arrangement, determination of coal tariffs, risk coverage guarantee structure and term sheets. The ministry has directed them to resolve all issues as soon as possible to avoid deletion from CPEC.

The CPEC projects are entitled to special treatment such as reduced taxes while power generation schemes are protected from the adverse impacts of circular debt.

Published in The Express Tribune, July 20th, 2016.

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Reader Comments (28)

  • pk
    Jul 20, 2016 - 9:42AM

    46 billion dollar of investment is asking for too much in a country whose avarage annual FDI is less then 1 billion dollar & not a single university in world’s top 500. I can say out of all promises only the road will connect from China to Gwader which will serve Chinese purpose & rest of the projects will suffer Kalabagh fate. Recommend

  • Pankaj
    Jul 20, 2016 - 10:03AM

    Ultimatly this project will shrink just to roads because this what Chinese need. Chines don’t care if other projects completes or not as far as road connectivity is done.Recommend

  • Np
    Jul 20, 2016 - 10:32AM

    China wants road to Gwadar to encircle India. It does not see it as energy corridor for China since it has direct access to central asian states without passing through Pakistan. So if you are counting on a lot of transit revenue from China, that is unlikely to come through.
    China’s strategic needs are going to be paid for by Pakistan at funds borrowed from China at 18% in Dollar terms. It is a great deal for China but is it such a great deal for Pakistan?
    What interest does China have in the power projects? None whatsoever. Is it any surprise then that there is hardly any progress on these projects?Recommend

  • Jameel ur Rasheed
    Jul 20, 2016 - 10:32AM

    What a coincidence that none of the shelved project is in Punjab.Recommend

  • Brekhna
    Jul 20, 2016 - 10:42AM

    @pk:
    You Indians may continue to dream, Pakistan is on road to redemption. All economic indicators point to that. Recommend

  • Bairoon Haath
    Jul 20, 2016 - 10:43AM

    Conspiracy from India to destabilize our country….Recommend

  • Chacha Jee
    Jul 20, 2016 - 11:01AM

    Gawader has no fresh water. Presently, it gets low pressure water for 3 Hours in a week. Where as Chabahar has no such problem. In fact Gawader was getting water supply from chabahar. It makes Gawader ‘ s potential to grow very small.Recommend

  • Salim Khan
    Jul 20, 2016 - 11:31AM

    Chinese are very clever. By putting unrealistic targets they have fooled us in not investing $46 billion but only the connectivity projects that will give them access to the Gulf countries. Recommend

  • Joe
    Jul 20, 2016 - 11:35AM

    @Pankaj:
    Not even road. This CPEC ballon is deflating faster than expected.Recommend

  • bharat
    Jul 20, 2016 - 12:56PM

    Chinese are trillions in the red.Its there decision what they want there future to be. Recommend

  • Amanullah Khana
    Jul 20, 2016 - 1:45PM

    Selection of Energy projects seems to be conspiracy or shortsightedness/ biassed vision of the leader of Planning Commission. Planning Commission the only think tank in Public sector is being politically corrupted. There are a large number of such incidences to prove the version. Gilchistan province including GB is the most sufferer federal unit being run by remote control because of the CPEC project. It also the most neglected area. Look at the decisions of the Federal Government those included priority given in selection of high cost Energy projects instead of pollution free and low cost hydro power projects like Diamer Dam (4500 MG), Bounji Dam (7100 MG) two dams in Skardu Area each having a capacity 2500 MG, Doyan Dam 425 MG besides a number of medium size sites ranging capacity of 500 to 1000 MG. Feasibility of Diamer, Bounji and Doyan Dams have already been carried out by WAPDA. Gilchistan is least important for the sitting federal Government despite their own dummy and powerless so called provincial Government. Recommend

  • Ramesh Krishnan
    Jul 20, 2016 - 2:15PM

    China has two main objectives here, its getting more and more clearer now…They want an opening to Indian Ocean to check rising fleet of Indian Navy…Second is to dump cheap Chinese goods in Pakistan so that they create more employment in China…Recommend

  • MAS
    Jul 20, 2016 - 2:22PM

    More indians are commenting on this which indicates that they are more concerned about the CPEC. Ok lets say Chinese want on the roads to get access to Middle East and Africa. So what would they be taking from here then…Just the Oil. Lolz…..This road is not just for oil, but for the Chinese businesses to access those markets. E.g. If Chinese are exporting cars to ME&A, this means that they will have to load 15 cars on a truck, bring them to Gawadar and export them from there. But if they bring in body parts, assemble them in Gawadar and then export it, that would be easy and more profitable.

    Wakeup Indians. Time for to accept the reality in actual. Read some facts, and then comment. Dont just read your own biased media that tells u that the coin has only one side. Recommend

  • Haji Atiya
    Jul 20, 2016 - 2:43PM

    @Ramesh Krishnan:
    You give too much weight to India in the grand scheme of things..! Not just for an opening in the Indian Ocean to check the Indian fleet, but also have direct access to the Persian Gulf to intercede US interests and ambitions.Recommend

  • Najam
    Jul 20, 2016 - 3:56PM

    The only reason I can see for these warnings is due to elections. Govt want these projects to be completed before next election so they can use them to fool the public. Recommend

  • cautious
    Jul 20, 2016 - 4:20PM

    If Pakistan has to manage/guarantee the Thar Coal projects then what does Engro bring to the table? It’s Pakistan’s coal which was leased to Engro with the hope that they would develop the property – if Pakistan has to do all the work and provide guarantees of debt then Pakistan should cancel the lease and manage the project themselves. The harsh reality is that Engro has no experience in coal mining and despite shopping the project throughout the World couldn’t find anybody willing to finance the project because they refused to put in sufficient equity. Recommend

  • vinsin
    Jul 20, 2016 - 4:48PM

    @Ramesh Krishnan:
    Indian Navy rising to what? Why China want to check that?

    @Chacha Jee:
    There is no fresh water in middle east also. It has nothing to do with development of a port or not.

    @Np:
    Road connecting China and Pakistan already exits and it is called Karakorum Highway, supported by Nehru. Recommend

  • Sohail
    Jul 20, 2016 - 5:54PM

    In comment section, interest of Indians shows the importance of CPEC for Pakistan.Recommend

  • Muzaffar
    Jul 20, 2016 - 7:18PM

    No wonder the chinese are asking CPEC to be handed over to the armyRecommend

  • hamza khan
    Jul 20, 2016 - 8:41PM

    @Ramesh Krishnan:

    india has no strategic value within china’s mind. its a non-factor. you’re a regional player (barely), china is a global player. go watch some bollywood movies. Recommend

  • LS
    Jul 21, 2016 - 2:11AM

    @hamza khan:
    Is that the reason India and china has more than $billion of trade? Is that why chinese subs snoop around in Indian Ocean trying to figure out what Indian Navy is doing since last decade? You have no sense of geo-politics.. Indian ocean controls 1/3 of global trade while the CPEC road even when built won’t contribute much unless industries from east of china shift to west of china… which no chinese company wants to do… your strategic location funda died the day Russia exited from Afghanistan… you have been trying to milk your location for decades and it only gave you billions of dollars in lost revenue, radicalization and worse economic conditions… while you got peanuts in return from US.. Recommend

  • Woz ahmed
    Jul 21, 2016 - 2:31AM

    @Muzaffar:
    @cautious:
    @Najam:
    @Haji Atiya:
    @MAS:
    @Bairoon Haath:
    @Brekhna:

    People need to be grownup before commenting.

    The next elections are due in May 2018 if not sooner, these projects were due to be completed at the end of 2018, so in theory election is irrelevant in terms of delay.

    Neelhum Jhelum project was rushed and now is a white elephant.

    Can any one name a project civilian or Military that has been on schedule?Recommend

  • anon
    Jul 21, 2016 - 2:35AM

    @hamza khan:
    Have you heard about “string of pearls” thinking of China?Recommend

  • syed & syed
    Jul 21, 2016 - 3:12AM

    @Salim Khan: Any one who invests looks his own interest first. Chinese are clever but why our Planning Commission is fool because it is headed by non technical persons like Ahsan Iqbal. He is fooling his own country men about the route of CPEC.Recommend

  • Sri Varahadev
    Jul 21, 2016 - 9:58AM

    With the death-knell being sounded for funding projects in Sindh and Balochistan, CPEC should change from being short form of China Pakistan Economic Corridor aka Conning Pakistani’s to Enrich China to becoming short form for China Punjab Economic Corridor aka Conning Punjabi’s to Enrich China.Recommend

  • Sawaiz
    Jul 21, 2016 - 12:29PM

    Gud tactic by government of Pakistan!

    It will force the respective companies to work faster!!
    Pml n zindabad
    PAKISTAN zindabad Recommend

  • Someone
    Jul 21, 2016 - 1:01PM

    Nothing extraordinary here. The completion is slated for 2018, project management and deadline checks are routine. The reaction here is rather pompous and unrealistic.Recommend

  • Saqib Hussain
    Sep 28, 2016 - 12:09AM

    I feel sorry for Indians as I see nothing but envy. Besides being 6 times smaller you Pakistan still has the courage to match India. Let me tell u as a fact. A counties whose armed forces rely on tv adds for recruitment what fight can its army fight. Peace for all. And don’t forget India that Pakistan is not alone. It has 56 brothers and 1 big brother China India’s nightmare Recommend

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